stanrose mafatlal lubechem ltd Auditors report

STANROSE MAFATLAL LUBECHEM LIMITED ANNUAL REPORT 2005-2006 AUDITORS REPORT TO THE SHAREHOLDERS We have audited the attached Balance Sheet of Stanrose Mafatlal Lubechem Limited as at 31st March, 2006 and also the Profit and Loss Account for the year ended on that dale annexed thereto and the Cash Flow Statement for the year ended on that date. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Auditing Standards generally accepted in India. These Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 1. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government in terms of Section 227 (4A) of the Companies Act, 19:56, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 2. Further to our comments in the Annexure referred to in paragraph (1) above, we report that: (i) we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit; (ii) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examinations of those books; (iii) the Balance Sheet and Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account: (iv) in our opinion, the Balance Sheet and Profit and Loss Account dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956; (v) on the basis of the written representations received from the Directors as on 31st March, 2006 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2006, from being appointed as a Director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956; (vi) attention is invited to the following in Schedule 15: a) regarding non-provision for doubtful debts and advances aggregating to Rs.4,69,01,843 (vide note No. 4) b) regarding non provision of interest of Rs.2,79,07,092 (vide note No. 6) c) regarding preparation of accounts on going concern basis (vide note No. 7) d) regarding non-provision of impairment loss as per AS 28 amount unascertained (vide note No. 8) We further report that without considering items (c) and (d) the effect of which could not be determined, had the observation made by us in item (a) and (b) above been considered, the loss for the year would have been Rs.7,61,15,241 (as against reported figure of Rs.13,06.306), accumulated losses would have been Rs.10,48,21,003 (as against reported figure of Rs.3,00,12,068), sundry debtors (net of provision) would have been Rs.3,04,597 (as against reported figure of Rs.4,60,96,199) and loans and advances (net of provision) would have been Rs.10,49,321 (as against reported figure of Rs.21,59,562). Subject to the foregoing, in our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the significant accounting policies and other notes thereon, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March. 2006; (b) in the case of the Profit and Loss Account, of the loss for the year ended on that date: and (c) in case of Cash Flow Statement, of the cash flows for the year ended on that date. For S. U. Kapasi & Co., Chartered Accountants SATISH U. KAPASI Proprietor Membership No. 30639 Ahmedabad, Dated : 26th June, 2006 ANNEXURE TO THE AUDITORS REPORT Re: Stanrose Mafatlal Lubechem Limited Referred to in paragraph (1) of our Report of even date. 1. The nature of Companys activities during the year have been such that clauses (xii) and (xiii) of paragraph 4 of the Companies (Auditors Report) Order, 2003 are not applicable to the Company for the year. 2. (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) Physical verification of Fixed Assets has not been carried out during the year hence discrepancy, if any in this respect could not be ascertained by the management and commented by us. (c) As per the information and explanations and records made available to us, fixed assets disposed of during the year were not substantial. 3. (a) Physical verification of inventory has been conducted during the year by the management at reasonable intervals. (b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and nature of its business. (c) The Company is maintaining proper records of inventory. Discrepancies noticed on physical verification have been properly dealt with in the books of account. 4. The Company has not granted or taken any loans to / from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956. Consequently, requirements of clauses (iii, b), (iii, c) and (iii, d) of (iii, e) (iii, f) and (iii, g) of paragraph 4 of the Order are not applicable. 5. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods. 6. There were no transactions that need to be entered in the Register in pursuance of Section 301 of the Companies Act, 1956. 7. The Company has not accepted deposits from the public within the meaning of Section 58A of the Companies Act, 1956 and the Rules framed thereunder. We are informed that no Order has been passed by the Company Law Board. 8. The Company did not have an internal audit system during the year. 9. The Central Government has not prescribed maintenance of the cost records under Section 209(1) (d) of the Companies Act, 1956, for any of the products of the Company. 10. (a) In our opinion and according to the information and explanations given to us, the Company is generally been regular in depositing undisputed dues with the appropriate authorities in respect of provident fund, income- tax, sales tax, professional tax, cess, gratuity, labour welfare funds dues, excise duty, octroi, property tax, municipal tax and municipal water charges. There was a delay in depositing Professional tax of * Rs.5,265 and Sales Tax of Rs.8,73,827. (b) according to the records and information & explanations given to us, there are no cases of non-deposit with appropriate authorities of disputed dues of sales-tax, income-tax, customs duty, wealth tax, excise duty and cess except the following: Name of Nature of Forum where the Statute Dues Amount (Rs.) Dispute is pending Sales Tax Sales Tax* 6,52,504 Dep. Act Commissioner * To the extent could be identified front available records and based upon informations and explanations provided by the management and our inability to comment on correctness and completeness of the same. 11. The accumulated losses of the Company as at the end of the year are more than fifty percent of its net worth. The Company has not incurred cash losses in the immediately preceding financial year under report. The Company has not incurred cash losses in the immediately preceding financial year. 12. The Company has defaulted in repayment of dues to banks. The amount and period of default is as follows: Rs.3,83,26,224/- for more than 12 months. 13. The Company has maintained records of the transactions and contracts of dealing or trading in shares and timely entries have peen made therein. The shares, securities, debentures and other investments are in the name of the Company, except to the extent of exemption granted under Section 49 of the Companies Act, 1956. 14. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from any bank or financial institution. 15. There were no term loans obtained by the Company during the year. 16. The Company has not raised any funds on short term or long term basis. 17. The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956. 18. No debentures have been issued by the Company and hence the question of creating securities in respect thereof does not arise. 19. During the year, the Company has not raised money by Public Issue. 20. According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the financial year. For S. U. KAPASI & CO. Chartered Accountants Satish U. Kapasi Proprietor Membership No. 30639 Place : Ahmedabad, Dated : 26th June, 2006